Promissory estoppel: Hong Kong Hua Qiao in the Court of Appeal

In Hong Kong Hua Qiao Co Ltd v Cham Ka Tai ([2015] HKEC 394, CA) L co-habited with C from 1992 or 1993 until L’s death in 1997. They had been in an intimate relationship from 1988 or 1989. L gave C very clear assurances that she would be the owner of two flats and that she would have 300 shares in Hong Kong Hua Qiao Co Ltd (‘the Company’). The Company was to be used as the vehicle for investment in small houses by L, C and another investor. L gave C the title deeds to one of the properties (‘the Property’) but there was no formal transfer to her. Title to the property was in the name of the Company, not in L’s name. At L’s request, draft share transfer documents were sent to C but L died before any further action could be taken.

At first instance, the Court ordered title to the Property and the 300 shares to be transferred to C. This was on the basis that C had established the essential elements of a promissory estoppel claim, applying the law in Luo Xing Juan v Estate of Hui Shee See. The Court of Appeal (Kwan JA delivering the judgment) upheld the first instance decision. In the process, it commented on some of the essential elements of this type of ‘hybrid’ proprietary / promissory estoppel claim.

There was no doubt that the relevant assurances had been given clearly and repeatedly. The substance of what L intended was perfectly plain ([26]).

On the question of reliance, there was no ‘but for’ test. It is enough for the assurances to be among the factors that C relied upon in her later conduct. If the promises were made, and there was conduct by C of such a nature that inducement may be inferred, then a rebuttable presumption arises that C relied on the promises ([30] referring to Wayling v Jones).

Reliance and detriment are often intertwined ([31]). At first instance, the court pointed to the fact that C left her husband and co-habited with L. She contributed a substantial sum of money to the maintenance of the Property and their joint living expenses. She had also worked for the Company without any salary. There were clear acts of detrimental reliance. Some of these acts straddled the periods before and after the making of the promises but this did not mean that they were not acts of detrimental reliance when they continued after the making of the promises ([42]). Nor did this fact mean that the relief should be reduced; after the assurances had been given, continuing with the same course of conduct could amount to detrimental reliance ([44]).

On the approach to be taken to the design of the relief:

‘Whilst the court does not grant relief beyond the minimum necessary to do justice, this does not require the court to be parsimonious although it recognises justice must be done to the defendant. Where the equity is raised by promissory estoppel in relation to a clear-cut promise that can readily be given effect, the court’s natural response is to fulfil the claimant’s expectations, subject to the remedy not being disproportionate to the detriment which its purpose is to avoid. If realising the claimant’s expectations in full would result in such a disproportion, the court will seek to satisfy the equity in a more limited way, while not abandoning its attempt to fulfil those expectations to an appropriate degree.’ ([44] referring to Luo Xing Juan v Estate of Hui Shee See at [70]).

Here it was appropriate to give full effect to the clear promises that had been made ([44]).

There was an attempt to argue that C had enjoyed the ‘countervailing benefit’ of living in the Property. This was held to be a circular argument, presumably on the basis that she was living there because she already had some kind of equitable right to do so (perhaps by analogy with an equitable interest under a common intention constructive trust).

Michael Lower


Tags: , , ,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: